Get information on the Mills Act property tax reduction

What is the Mills Act?

The Mills Act is a statewide law that allows for a potential reduction in the property taxes of designated historical structures in return for the preservation and maintenance of the structure. Local governments (eg., cities or counties) have to decide that they want to have the Mills Act within their jurisdictions. The San Diego City Council adopted a policy about the use of the Mills Act (PDF) program in 1995. Additional information on the Mills Act is also available in a City Planning & Community Investment Department handout (PDF: 117K).

How much will I save on my property taxes?

The amount you save will depend on your property's location, size and comparable rents in the area. The value continues to be assessed by the County Tax Assessor's office using a formula and procedures contained in state law. Property tax reductions result when the property tax amount that is based on the Mills Act value is compared to the previous property tax amount. The savings vary from property to property, and have ranged from 20% to 70% based on the County Tax Assessor's property valuations in accordance with the state law formula. Properties that have been under the same ownership for a long time (e.g., pre-Prop. 13), where the property taxes are already low compared to homes sold at the peak of the market, will most likely not benefit from the Mills Act.

Is my building eligible for the Mills Act without local historical designation?

No; local historical designation is required before you can enter into a Mills Act agreement. Even if your property is listed on the National Register and/or California Register, but is not designated historical by the City of San Diego, your property is not eligible for the Mills Act.

How do I apply for the Mills Act?

The Planning Department has a handout (PDF: 117K) explaining the Mills Act program. Your property must first be a designated historical site. After designation, if your property is not inside a Redevelopment Area, submit a one-page letter to the Historical Resources Board Secretary requesting a Mills Act agreement for property tax reduction, citing the address, and the HRB site number assigned by the HRB staff. Include the address and assessor's parcel number along with the exact names of all owners as they appear on title. An agreement will be prepared and mailed for your notarized signature. The agreement must be signed, notarized, and returned to the Board Secretary with the required one-time fee. The deadline for Mills Act agreement requests is October 1 of each year. If you submit the request letter before October 1, and follow the procedures to execute the agreement in a timely manner, the agreement will be recorded by December 31 of that year. Any Mills Act agreement that is recorded with the County of San Diego by December 31 of a given calendar year will go into effect for a potential tax adjustment in the following tax year.

If your property is within a Redevelopment Area, the request for a Mills Act along with any other information required by the Redevelopment Area must first be submitted to the Redevelopment Agency staff. If the Redevelopment Agency approves the Mills Act, then you would submit proof of their approval along with a one-page letter requesting a Mills Act agreement for property tax reduction to the Historical Resources Board Secretary. The rest of the processing information above would apply.

What is the term of the Mills Act agreement?

The terms of Mills Act agreements are established by state law. The initial term of the agreement is ten years. The agreement is automatically renewed each year for an additional year, and changes the expiration date so that 10 years is still left in the term of the agreement. The agreement will thus continue in effect indefinitely unless notice is served by either party for the automatic renewals to stop. If either party serves notice for the automatic renewals to stop, the agreement will expire on the agreement's current expiration date, which would be about ten years after the notice is recorded.

What are the responsibilities of a Mills Act agreement?

The responsibilities of Mills Act agreements are established by state law and any other requirements set up by the local Mills Act program. Generally, the property owner is required to maintain and preserve the site in accordance with the Secretary of the Interior's Standards. All other local regulations on historical sites in the City of San Diego Municipal Code also apply.

If I sell my property, does the new owner have to apply again to obtain the Mills Act?

If you own a property that has been designated as historical by the Historical Resources Board and you have a Mills Act agreement recorded on your property, the Mills Act benefits go with the land. That way, new owners "inherit" the agreement's benefits and responsibilities.

Is the Mills Act available to all local individual historically designated structures and those in established local historical districts?

Yes, except within Redevelopment Areas. The Mills Act (PDF: 117K) is not uniformly allowed for all buildings in these areas, especially not for commercial structures unless substantial rehabilitation is occurring (e.g., Gaslamp). You should check with the staff of the particular Redevelopment Area to find out if they will approve a Mills Act agreement.

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